Czech MPs approve plan to return church property

Reuters

* Assets were seized during 1948-1989 communist era

PRAGUE, July 13 (Reuters) - The Czech Republic is to returnproperty seized from churches during the 1948-1989 communist eraunder legislation approved by its lower house of parliament onFriday, a major step towards ending years of wrangling over thefate of the assets.

Under a plan agreed by the ruling parties and 17 religiousgroups led by the Catholic church, the government intends togive back most confiscated assets, mainly land and buildingsworth some $4 billion, plus about $2.8 billion in cashcompensation split into 30 annual payments.

The plan may cause a one-off jump in the budget deficit of1.5 percent of gross domestic product, the central bank hasassessed, because all future payments would be accounted forimmediately.

Prime Minister Petr Necas's centre-right government hasimpressed investors with its steps to narrow the budget deficitand plans to overhaul the pension, health and welfare systems.

But it nearly collapsed over the church restitution plan, ahighly divisive decision in an era of tax increases and spendingcuts needed to narrow the budget deficit.

The return of church property had been planned since thebloodless 1989 "Velvet Revolution".

But it had until now never won enough political support inthe largely atheist central European country. The leftistopposition strongly opposed the measure, also citing severeeconomic headwinds.

The plan is likely to be vetoed by the upper house, theSenate, which is dominated by leftists, but the lower house canoverturn the veto later this year.

The Prague cabinet has been shaky since it took power inmid-2010, beset by a string of internal disputes caused bycorruption scandals, personality clashes and the demands ofindividual parties.

But it has survived due to a lack of alternative governmentalliances and the ruling parties' concern that an early electionwould hand power to the opposition.